Former Liberal prime minister Malcolm Fraser has called for a royal commission into the government’s controversial policy of processing all asylum seekers offshore, branding the detention facilities where they are kept Australia’s “gulag”.

Fraser said it was “quite clear” the Department of Immigration was responsible for allowing “the most terrible conditions to prevail” on Manus Island and Nauru. “What has happened on Manus is not new, it has been going on for months and months. The department have known that, and it’s only public exposure that has brought it to light,” the ex-prime minister said.

He reiterated his criticism of offshore processing policy as “wrong”, adding: “If you really want to stop people, you’d establish a major processing centre in Indonesia with UNHCR.”

The Department of Immigration confirmed on Wednesday that 70 asylum seekers detained on Manus Island had been transferred back to detention centres in mainland Australia as part of a plan to empty the regional processing centre as soon as possible to make way for new arrivals under the new transfer deal with the PNG government.

A spokeswoman said the immigration minister, Tony Burke, had signed off the transfer but she was unable to give the date when it had been approved. She said the transfer was “not a knee-jerk reaction” to the allegations broadcast on SBS’s Dateline on Tuesday, in which an ex-employee of security company G4S and senior manager at the Manus Island regional processing facility claimed that some detainees had been raped and abused on Manus and Department of Immigration staff failed to act to stop further violence.

Burke travelled to PNG on Wednesday and said he intended to investigate the allegations fully.

The transfer raises questions about which jurisdiction any allegations of assault or rape would fall under, as assaults occurring in PNG should be dealt with by local police. The immigration minister pledged an investigation of the allegations, but with all asylum seekers held on Manus being transferred back to the mainland it is unclear how these allegations can be properly investigated by PNG police.

The spokeswoman confirmed that the group of 70 transferred from Manus were delivered to detention facilities in Darwin earlier on Wednesday and would be dispersed around the detention network on mainland Australia.

The department reiterated its statement, issued earlier on Wednesday, that it had received no allegations of rape in the detention facility, and had received one of sexual assault where the alleged victim dropped the charges after being questioned by PNG police.

It is understood that the remaining 60 asylum seekers held in the processing facility will be transferred off the island soon. It is unlikely that asylum seekers who arrived by boat after the government’s 13 August “no advantage” policy announcement will be transferred to Manus. This is because the site is being prepared for those who arrive in Australia following the government’s new deal with PNG, under which all irregular maritime arrivals will be sent offshore.

It is understood that transfers under the new deal will begin within weeks.